This Euro rate report will address the factors that are likely to affect EUR exchange rates this week, looking specifically at the potential for tapering of the monetary stimulus program by the European Central Bank. In the table below you’ll see high to low GBP/EUR exchange rate movement when exchanging £200,000 to Euros yesterday. To keep track of GBP/EUR rates visit our live currency rates page.
|Currency Pair||% Change||Difference on £200,000|
Monetary policy has been the focus of investors today following the release of the Bank Lending Survey from the European Central Bank (ECB).
The ECB’s findings show an increase in demand for credit in all areas. Credit has become more accessible following an easing of credit standards. Increasing those eligible for a loan both in business and in households.
Demand for housing loans has been driven by low interest rates and favourable housing market prospects. This indicates that current loose monetary policy is stimulating demand for credit a sign that the health of the Eurozone economy is improving.
Although this is justification for current monetary policy and should not be changed as of yet, if the economy shows continued improvement then we could see Quantitative Easing (QE) tapering. QE is essentially pumping money into an economy to stimulate growth. The current figure is an €80bn increment per month in the Eurozone. We have seen spurts of positive data in the Eurozone before, but it has been sustained.
Recent positive data has been much wider and more sustained both in market sector and geographically. If this continues there is the strong possibility of tapering which would no doubt cause significant Euro strength.
We have the ECB interest rate decision tomorrow, I think it is highly unlikely there will be any change, but the following monetary policy statement could give a hint to the ECB’s plans moving forward which could cause movement on GBP/EUR.
If you are buying Euros with Sterling it is important to have realistic expectations, it may even be wise to take advantage of current levels considering the Brexit situation.
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